Michigan AG: TIF Funds For Detroit Hockey Arena Are Legal

CHICAGO — Michigan Attorney General Bill Schuette issued an opinion that Detroit's Downtown Development Authority has the constitutional authority to use its funds for a new $650 million hockey arena and entertainment district.

"This opinion builds upon existing state Supreme Court precedent, as well as previous AG opinions as far back as Frank Kelley," Schuette said in a Dec. 11 press release announcing the decision. "The DDA Act was enacted to provide a tool to aid municipalities.... thereby benefiting the economic growth of a designed development area."

State Rep. Rose Mary Robinson, D-Detroit, asked Schuette for the opinion in September. Robinson said she had hoped the AG would find the use of potential school funds captured in the TIF district illegal.

Schuette said the capture is legal because it occurs before the money is transferred to the School Aid Fund and no money is transferred out of the fund.

The $650 million project, to be located just outside downtown, will be the new home for the Detroit Red Wings hockey team, owned by Detroit's influential Illitch family, who also own the Detroit Tigers baseball team and the Little Ceasars pizza chain. The development also calls for a 45-block mixed-use district surrounding the arena.

The Michigan Strategic Fund is expected to issue $450 million of debt for the project. That includes $200 million of taxable bonds privately placed with Comerica Bank and $250 million of tax-exempt bonds that will be backed by a pledge from the downtown development authority of up to $15 million a year from tax increment revenues. The DDA is also expected to contribute $64.5 million from other TIF revenues for the deal.

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